Lenders resist scapegoat role in PM's talks

Britain's banks are ready to put up a tough defence of their lending practices at today's meeting with Gordon Brown, as they seek help from the government to lift them out of their current funding crisis. Privately, the banks are making it clear that they know they could become easy targets for politicians looking for ways to explain to the public why it is harder to obtain a mortgage.

While Alistair Darling will not attend the meeting, the chancellor has called on the banks to pass on the cuts in official Bank of England rates to customers in the mortgage market.

The banks insist that they are passing on the cuts to customers with variable rate mortgages and tracker products.

One banking source said: "The whole thing about passing on base rate cuts is an attempt to shift the blame."

Another said: "There are elections in May and there need to be some words directed at the banks." State-owned Northern Rock has yet to pass on the recent interest rate cut.

The banks have not been given an agenda for their meeting with the prime minister but this weekend he may have handed them a few clues by calling on them to "agree as a group to come clean about the potential bad debts they face" which "could reduce the uncertainty and risk they face" and restore confidence back into the markets.

"To create conditions where banks feed through their interest rate cuts to homeowners and new buyers, we must first rebuild confidence in the banking system and reduce the uncertainty that is currently holding the banks back from lending to each other," Brown said.

Today's meeting is thought to involve not only the chief executives of the high street banks but also representatives from investment banks.

Bankers are keen to hear whether Brown has concrete solutions to the current credit crunch and want progress on talks about putting more liquidity into the financial markets.

Even if fresh funds become available to the banking industry, few are ready to say that the days of easy credit will return.

"Banks are only going to lend money in the future to people who can afford to repay them.

"It will be more like the 1950s. Customers will have to queue up to get loans," one industry observer said.